CostThe Underused Housing Tax (UHT) is a federal 1% annual tax on the value of vacant or underused residential property owned by certain non-resident, non-Canadian owners. Canadian citizens and permanent residents are generally exempt from the tax itself, but some ownership structures (like certain corporations or trusts) still have to file an annual return even when exempt.
Who the tax actually targets
The Underused Housing Tax is a federal measure specifically aimed at vacant or underused residential property owned by non-resident, non-Canadian owners — it's a federal complement to provincial and municipal measures like BC's Speculation and Vacancy Tax or Toronto's vacant home tax, but operates independently at the national level. Canadian citizens and permanent residents who own property directly in their own name are generally exempt from the tax itself.
Who still has to file, even if exempt from paying
This is the detail that catches people off guard: certain ownership structures — including some corporations, partnerships, and trusts, even those wholly owned by Canadian citizens — may still be required to file an annual UHT return to claim their exemption, even though no tax is actually owed. Simply being exempt from the tax doesn't automatically mean there's no filing obligation; the two are separate questions.
The rate and what it applies to
Where the tax does apply, it's calculated at 1% of the property's value annually. Given the complexity of the exemption and filing rules — and real penalties for failing to file when required — anyone owning residential property through a corporation, partnership, or trust structure, regardless of citizenship, should confirm their specific filing obligation with an accountant rather than assuming exemption means no action needed.